Are Consumers Falling into the Credit Card Trap Again?
NEW YORK (LowCards.com) -- Maybe consumers are feeling better about the economy. Or could it be that we are once again starting to rely on our credit cards a little too much? Some recently released figures make an argument for both sides of this debate.
The Federal Reserve Bank of New York released its latest Quarterly Report on Household Debt and Credit recently. It showed the number of open credit card accounts rose by 3 million, to 386 million, during the fourth quarter of last year.
Credit account inquiries within six months, an indicator of consumer credit demand, increased 2.7% for the third quarter in a row.The report also found that credit card limits rose by $98 billion, or 3.6%, in the fourth quarter of last year, resuming the trend of increases observed in the first half of the year. This may indicate that banks are willing to take more of a financial risk with their cardholders. The last two monthly G19 reports from the Federal Reserve show that consumers used their credit cards quite extensively to fund their holiday shopping. Revolving credit, which is made up primarily of credit card debt, increased at an annual rate of 4.1% in December. It rose nearly $3 billion, to $801 billion. This follows a jump of $5.5 billion in November, an annual rate increase of 8.4%. December was the fourth straight month of increases in revolving credit. Consumer spending is one sign of a healthy economy. Consumers can't afford to fall into the trap of spending more than they can afford, though, especially on their credit cards. If cardholders carry a balance on their credit cards, the high APRs issuers are now charging will destroy them financially. If consumers can't pay off their entire balance on time every month, they will start to fall into the trap that helped lead to so many troubles during the recent economic recession. -- Reported by Bill Hardekopf of LowCards.com.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV